May 22, 2007

 

Grain production would catch up with demand, EU report says

 

 

As grain prices rise, the meat that are the raw materials for processing plants become pricier adding to the higher packaging and energy costs that plants already have to deal with.

However, according to a report released by the European Commission, higher grain prices would push farmers into increasing grain production over the next two years, hence alleviating the shortage.

 

Although continued annual growth in consumption is expected, the global stocks to use ratio of maize was just 12 per cent in the 2006 to 2007 growing season and is forecast to remain low, the Commission reported.

 

This may change by 2009, when the biofuel industry is expected to consume about 30 per cent of the corn crop. By then, feed use of corn may be scaled back to 40 or 50 percent of the crop, compared to the 60 percent now.

 

In the EU, the largest wheat producer and consumer, net exports are expected to rise, as production grows faster than consumption.

 

In developing countries, prospects for vegetable oils are looking bright as a rising population and income growth created more demand.

Last year the Organisation for Economic Cooperation and Development and the Food and Agriculture Organisation anticipated an increase in oilseed prices of about 20 per cent.

 

Although the EU is not the largest importer of vegetable oils, its imports are rising rapidly. Malaysian palm oil exports to the EU have tripled in the last five years

The EU switched from being a net exporter of soya oil to a net importer last year.

Meanwhile, the report noted that  pork prices fell by about 10 per cent in 2006, due largely to oversupply in the market. Poultry prices also fell by about 10 per cent, due to bird flu while beef prices remained stable.

According to a US government agency, world trade in meat fell by 2 per cent in 2006, a reflection of higher feed costs, particularly in the pig and poultry sectors.

 

Poultry, the fastest growing sector, may see prices rising by up to 14 per cent, according to US estimates.

 

Rising demand in Asia is also expected to boost beef and veal consumption.